Oracle, Cisco break ranks, support repeal of net neutrality rules

FCC Chairman Ajit Pai, a longtime critic of the government’s role in regulating the Internet economy, unveiled a proposal last month that would peel back rules intended to ensure that Internet providers treat all traffic moving through their networks equally.

FCC Chairman Ajit Pai, a longtime critic of the government’s role...

The resurgent debate over net neutrality regulations has created battle lines that pit some of the technology industry’s most prominent companies against one another.

Cisco Systems of San Jose and Oracle of Redwood City have broken ranks with a significant swath of Silicon Valley — including companies like Facebook, Google, Salesforce and Netflix — in supporting the Federal Communications Commission’s proposal to sharply curtail the amount of oversight regulators have over high-speed Internet providers.

Supporting an overhaul of net neutrality is less about taking a political stance for Oracle and Cisco and more about boosting the bottom line, experts said. Both companies have major business interests in the telecommunications industry.

FCC Chairman Ajit Pai, a longtime critic of the government’s role in regulating the Internet economy, unveiled a proposal last month that would peel back rules intended to ensure that Internet providers treat all traffic moving through their networks equally. Pai has called the rules a heavy-handed approach to government regulation and blamed them for discouraging needed investments in Internet infrastructure.

“From our perspective as a Silicon Valley technology company,” Glueck wrote, “what should have been a purely technological discussion of managing traffic on Internet networks has inexplicably evolved into a highly political hyperbolic battle, substantially removed from technical, economic and consumer reality.”

In an interview, Glueck added that Oracle was chiefly concerned with ensuring that net neutrality regulations are applied evenly to Internet companies of all stripes. Companies like Google, with a range of apps that effectively connect users to the Internet through their phones, should not be exempted from the rules covering Internet providers, Glueck said.

“We need to think about regulatory neutrality. Similar players doing similar things ought to be treated similarly,” he said. “What we’re saying is, if we want an open Internet, we need to think about the way that people actually use the Internet.”

With a few exceptions like its Google Fiber services, Google is not considered to be an Internet provider, so the FCC’s regulations don’t apply.

Shortly after Pai announced his intent to repeal net neutrality rules, Cisco Vice President Jeff Campbell wrote on the company’s blog that “it is our hope that this new vision will be the first step in creating sustainable light-touch regulation for the Internet once and for all.”

The FCC’s proposal would undo the agency’s 2015 decision to designate Internet providers like Comcast and Verizon as “common carriers,” a distinction that gave the agency broader oversight over those companies.

But where Pai and his supporters see governmental overreach, supporters of the regulations see them as critical to preventing Internet providers from forcing content purveyors to pay for “fast-lane” access to their networks.

Troubled by the potential harm such pay-to-play schemes could have on their businesses, many tech companies have rallied around strong net neutrality protections.

“Eliminating net neutrality protections will result in an inferior Internet,” said Noah Theran, a spokesman for the Internet Association, a trade group representing some of the most prominent companies in Silicon Valley, in an email.

Most companies in Silicon Valley can be considered content companies, noted Benjamin Hermalin, an economics professor at the UC Berkeley Haas School of Business, as they stream videos or deliver apps.

“If you’re a content company, you really want net neutrality, because it’s not to your advantage whatsoever to allow the large telecom companies to start charging differential rates for last-mile service to the home,” he said.

By contrast, Cisco’s “clientele would be large telecom companies, and thus it might want to align with them,” said Hermalin. Cisco, which makes a variety of networking equipment for telecommunications companies, declined to comment.

Likewise, Oracle’s stance is “a function of the company looking at what’s in their best interest,” said Steve Koenig, an analyst at Wedbush Securities in San Francisco.

Many of Oracle’s customers support the FCC’s rollback of net neutrality rules — and thus it’s a prudent choice for Oracle to align with them.

On May 4, just a day before Oracle’s Glueck sent his letter to the FCC, AT&T and Oracle announced a deal to run thousands of AT&T databases in Oracle’s data centers.

Joan Marsh, an AT&T executive, has called the FCC rules that Pai wants to undo an “outdated regulatory scheme designed for networks of a bygone age.”

Glueck said that the companies are longtime business partners and that the database deal was unrelated to the company’s position on net neutrality.

The FCC has received more than 184,000 public comments on its proposal to roll back net neutrality rules. The agency will take up the issue again at its next meeting on May 18.